“I’m paycheck to paycheck.” I make $350,000 a year, but I have $88,000 in student loans, $170,000 in auto loans, and a $4,500 monthly mortgage. Need professional help?

question: By the end of 2022, I will be the sole breadwinner and head of the household earning $350,000 before taxes. This is a great starting point and we are fully aware of how privileged we are to be in this position, but we are always looking ahead on how to improve. close) and very little credit card debt (less than $2,000 and over $25,000 available). I have two auto loans totaling $170,000 for his two electric cars at 5% interest.

I was recently offered a $200,000 HELOC at 9%. This will help you make some small repairs and improvements to your home, but you want to make the right move. Several long-term real estate investment opportunities were also presented that are out-of-state rental properties and are currently achieving 10-12% ROI. But my biggest concern is that after deducting taxes, 401(k) contributions, bills, savings, and a mortgage ($4,500), paycheck to paycheck goes on paper. I would like to use this HELOC to pay off my debt while participating in some of these investment opportunities. I am the first person in my generation to own a home and the first person to earn this much each year and I don’t want to ruin this. Specifically, how can a financial advisor help me? (Also looking for a new financial advisor? This tool helps match you with an advisor that fits your needs.)

answer: There are several questions to address here, so let’s go through them one by one. The first is HELOC. Yes, HELOCs are a good way to consolidate your debt, but the average HELOC rate is just over 6%, so the rate you’re being quoted is not a good one. Chris Cheng, Certified Financial Planner, Insight Financial Strategist, said: He added, “Since HELOCs are typically floating rate and in an environment of rising interest rates, we would like you to consider the potential impact of Fed policy and inflation on interest rates. can be significantly higher,” says Chen.

Additionally, student loans, car loans, and home loans are all likely to be less than 9%, so consolidation by HELOC is unlikely to save you money. “Another method, like the snowball method, that focuses on one loan (usually the smallest loan) and directs all resources to pay off that loan while maintaining payments on other loans. You might want to start with,” says Chen. This method may help you pay off your student loans and car loans.

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When it comes to those real estate investments, what do you really know about those returns? If so, it is very expensive and often there is something else that makes the investment less desirable if you get a much higher return than usual. increase. (Also looking for a new financial advisor? This tool helps match you with an advisor that fits your needs.)

Caleb Paddock, a certified financial planner, says you might actually want to work with a money coach before working with a financial advisor. While financial advisors help develop investment strategies and long-term financial plans, money coaches offer a more educational experience and focus on the short-term goals of money management. , helps create systems and processes that pay off all debt, maximize cash flow, and actively direct money,” says Paddock.

Having a high income is great, but there is a concept called Parkinson’s Law. This basically says that no matter how high your income gets, your expenses will always increase in line with your income, Paddock explains. “By working with a money coach, you can break Parkinson’s Law, eliminate debt, and enhance your investment and life planning with a financial advisor,” says Paddock.

A financial advisor can also help. Daniel Harrison, a certified financial planner at Harrison Financial Planning, says to look for someone who does comprehensive financial planning and can help you create a more comprehensive plan for your money. “They can assist you by helping you create short- and long-term goals and providing guidance on financial decisions and opportunities presented,” Harrison says.

A financial advisor can also help you take a long-term approach to your money and create a spending plan that doesn’t make you think you’re living paycheck to paycheck on a $350,000 salary. . “Everyone has a blind spot when it comes to finances, so finding a competent financial partner is invaluable,” says Harrison.Also looking for a new financial advisor? This tool helps match you with an advisor that fits your needs.)

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*Question edited for brevity and clarity.